CORPORATION LAW part I

CORPORATION

• An artificial being created by operation of the law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence.

ATTRIBUTES:

1. Artificial being
2. Created by operation of the law
3. Rights of succession
4. Powers, attributes and properties expressly authorized by law or incident to its existence

ADVANTAGES OF CORPORATE FORM OF BUSINESS:

1. Capacity to act as a single unit
2. Limited stockholder's liability
3. Continuity of existence
4. Feasibility of greater undertaking
5. Transferability of Shares
6. Centralized Management
7. Standardized method of organization, management and finance

DISADVANTAGES OF THE CORPORATE FORM OF BUSINESS:

1. Formal proceedings sush as Board meetings are required (to have a valid & binding corporate act).
2. Business transaction is limited to the State of its incorporation and may not act as such corporation in other jurisdiction, unless it has obtained license or authority from foreign state.
3. Shareholder's limited liability tends to limit the credit.
4. Transfer of Share may result to uniting incompatible and conflicting interests.
5. Minority shareholders have practically no say in the conduct of corporate affairs
6. In large scale enterprises, stockholder's voting rights may become merly fictitious and theoretical because of disinterest in management,wide scale ownership and inaccessible place of meeting.
7. Double taxation may be imposed on corporate income.
8. Corporation are subject to governmental regulations supervision and control including submission of reportorial requirements and otherwise imposed in other business form.

Q: What are the two requisites for a stockholder to exists?

A:

1. Capital Stock divided into shares
2. Authority to distribute to the holders of such shares dividends or allotments of surplus profits. (CIR VS. CLUB FILIPINO, INC. OF CEBU)

Q: What law should govern those corporations created by special law or charter?

A: They shall be governed primarily by the provisions of the special law or charter creating them, supplemented by the provisions of Corporation Code, in so far as they are applicable.

Q: Is registration with SEC required for them to acquirea legal and juridical personality?

A: No. They are their existence as such not by virtue of their compliance with the requirements of registration under the corporation code but by virtue of the law specially creating them.

Q: What is the test in determining whether they are governed by the Civil Service Law?

A: The manner of their creation.

Q: If they are incorporated under General Corporation Law?

A: Employee and Employer relationship shall be governed by the Labor Code. (PNOC-ENERGY DEV'T CORP VS. NLRC)